Showing posts with label Venezuela. Show all posts
Showing posts with label Venezuela. Show all posts

Wednesday, November 21, 2012

Venezuela mining outlook grim

The mining sector in Venezuela is expected to continue declining as a result of minimal private participation after the government nationalised gold mining and discouraged other private mining, industry officials say.

“There’s no major private mining company today,” says Luis Alejandro Rojas Machado, president of Venezuela’s mining chamber Camiven.

In 2010, Venezuelan mining accounted for 27% of the gross domestic product (GDP), according to the United Nations Economic Commission for Latin America and the Caribbean (Eclac). That was the highest rate in Latin America. However, it marked a decline from the 2005 level of 30.3%. Meanwhile, Venezuela’s GDP shrank in both 2009 and 2010.

Earlier this month, the government took over the nickel concession of Anglo American after it expired. Production at its Loma de Nickel mine stopped in September.

After the forced exit of several foreign mining companies, the only significant foreign company now active is CITIC, a state-owned Chinese conglomerate that will develop the Las Cristinas gold mine, one of the world’s largest gold deposits. “Las Cristinas will take between seven and ten years to develop,” Rojas estimates. “The Chinese might use their financial muscle to accelerate that, but you can’t develop a good mine in a day or two.”

Meanwhile, Rojas fears that the state dominance will result in inadequate investments for the development of the sector. “If we don’t see investments, there won’t be production,” he says.

Last year, the mining sector contracted – a trend expected this year as well, according to Rojas. “We have a legal environment that doesn’t permit development,” he says. “This will keep the local mining sector in recession.”

The Venezuelan government nationalised gold mining in August 2011, but by February it had expropriated Las Cristinas from Canadian miner Crystallex, which had tried to develop the mine since 2002, after it was confiscated from Canada-based Vanessa Ventures, in November 2001.

Crystallex has sued Venezuela at The World Bank's International Centre for Settlement of Investment Disputes (ICSID) for $4.3-billion. The ICSID hearing is scheduled a year from now – in November 2013 and the company has no further comments on the dispute.

“The company’s position is to not comment on the case or proceedings,” VP for investor relations Richard Marshall told Mining Weekly Online.

Another company that was affected was Canadian-Russian miner Rusoro Mining, which also saw its assets nationalised without compensation. In July it filed an arbitration claim at ICSID.

“The Venezuelan government's actions have resulted in significant loss to the company and its shareholders,” Rusoro President and CEO Andre Agapov said in a statement at the time. “In light of the government's apparent unwillingness to look for an amicable resolution, it became the company's sole recourse to commence international arbitration.”

Agapov did not respond to several interview requests from Mining Weekly Online, but according to Venezuelan newspaper El Mundo, the company is still hoping to reach a friendly solution with the Venezuelan government, which includes the right to develop mines in the country and recover its $1-billion investment.

Edited by: Henry Lazenby

Monday, March 19, 2012

Rusoro says Venezuela will likely nationalise its gold assets, shares fall 12%

Vancouver-based Rusoro Mining is preparing to seek international arbitration to obtain compensation for the assets it expects to be nationalised after a deadline to negotiate with the government lapsed

VENEZUELA - Rusoro Mining Ltd. (RML), the last remaining publicly traded gold miner in Venezuela, expects its gold assets in the South American country to be taken over after a deadline to negotiate with the government lapsed, Chief Executive Officer Andre Agapov said. The stock slid 12 percent.

Rusoro is preparing to seek international arbitration to obtain compensation for the assets as the Venezuelan government's joint venture offers undervalue the company's gold resources, Agapov said today in a phone interview from New York.

"As of today, all the assets will be nationalized and they will take control of operations," Agapov said.

Rusoro, based in Vancouver, began talks to form a joint venture with state oil company Petroleos de Venezuela SA and transfer 55 percent of its gold assets to the government in August after President Hugo Chavez nationalized the industry. Rusoro would be the fifth mining company seeking compensation from Venezuela through the World Bank's arbitration court following nationalizations.

The government made two verbal offers, including one presented two days ago, to compensate Rusoro for a reduced holding and didn't put any value on its gold resources or reserves, said Agapov. Yesterday was the negotiations deadline.

Rejected Offers

"In the past 180 days, we never saw an offer presented to us in writing," said Agapov. "There were several meetings and several proposals from their side and none of them were acceptable to Rusoro shareholders."

Rusoro fell 12 percent to 11 Canadian cents in Toronto trading as of 2:05 p.m. The stock has dropped 65 percent in the last year.

Rusoro, which has gold reserves of 5.6 million ounces, operates the Choco 10 mine and the Isidora mine in southeastern Venezuela, according to the company's website.

The company has the potential to produce a half million ounces of gold a year in Venezuela, Agapov said.

Rusoro officials met with Venezuela's Oil and Mining Minister Rafael Ramirez shortly after the gold nationalization law was passed and he promised to pay the company a fair value so capital markets would see that the Venezuelan government was willing to seek an adequate level of compensation, said Agapov.

Minister Meeting

"It was a very optimistic start, and then all the people who started to work with us on the settlement were proposing completely different things and much lower valuations," he said. "There was no way we could have accepted their numbers or conditions."

The company has until June 15 to file for arbitration with the ICSID, as the Washington-based arbitration court is known, said Agapov.

"If they would like to continue negotiations and reach an acceptable deal, of course we are willing," he said. "We have 90 days until we have to file for arbitration."

President Chavez in January said that Venezuela wouldn't accept ICSID rulings. The agency is overseeing about 20 cases filed since Venezuela in 2006 began nationalizing assets in industries including oil, mining, cement and telecommunications.

Friday, March 16, 2012

Rusoro Mining Ltd.: Expiration of Negotiation Period with Venezuelan Government for Nationalization

VANCOUVER, BRITISH COLUMBIA - Rusoro Mining Ltd. (TSX VENTURE:RML) (“Rusoro” or “the Company”) reports the following:

The extended deadline of the period fixed by the Nationalization Decree No. 8413 to negotiate the compensation due to Rusoro and the terms of the migration of Rusoro’s mining assets to a Mixed Enterprise to be controlled by the Venezuelan Government will expire as of the end of day today. At this time, the Company is not aware of any further extension.

The Nationalization Decree established an initial 90-day fixed negotiation period ending December 15, 2011, but was subsequently extended by decree No. 8683 for another 90 days, to March 14, 2012.

Therefore, in accordance with the procedures outlined in the Nationalization Decree, the Company believes that 100% of its Venezuelan mining concessions, related contracts and assets revert to the Venezuelan Government effective as of the end of today unless a further extension is granted.

To date, Rusoro is still in conversations with the Venezuelan Government but has not yet reached an agreement with respect to the compensation due to Rusoro pursuant to the nationalization of its gold-mining assets. The Company continues to seek an amicable resolution with the Venezuelan Government. However, Rusoro also continues to review its position, rights and claims under the bilateral investment treaty between Canada and Venezuela which provides that the Venezuelan Government must pay a fair, prompt and timely compensation as a result of the nationalization. In this regard, Rusoro will consider all steps necessary, including international arbitration, in order to protect its investments in Venezuela, and the interests of its stakeholders.


On September 16, 2011, the Venezuelan government, through publication in the Official Gazette of Venezuela, enacted a law-decree 8413 (“Nationalization Decree” or “Decree”) which reserves to the State of Venezuela exclusive rights for the extraction of gold in Venezuela (“the Nationalization”). According to the Decree, all Venezuelan mining assets, including those of the Company, must be transferred to a new mixed-interest enterprise (“Mixed Enterprise”), of which private enterprises, such as the Company, cannot own more than 45%. The Decree stipulates that the Company had 90 days from September 16, 2011 to negotiate the terms and conditions of the forced migration of mining assets to the Mixed Enterprise, including the compensation to the Company for assets transferred to the Mixed Enterprise as a result of the Nationalization. If the Company is unable to agree upon the terms and conditions of the forced migration within the designated time period, 100% of the Company’s mining concessions, related contracts and assets will revert to the Venezuelan government, provided that no extension is granted on the negotiation period.


Andre Agapov, President & CEO

Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company’s capability to execute and implement its future plans. Actual results may differ materially from those projected by management. For such statements, we claim the safe harbour for forward-looking statements within the meaning of the Private Securities Legislation Reform Act of 1995.

“Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.”

Source: Marketwire

Saturday, February 25, 2012

Venezuela to develop Cristinas gold mine with China

Venezuela will develop its huge Las Cristinas gold project in partnership with Chinese state investment company CITIC, President Hugo Chavez announced on Friday.

The government last year cancelled Canadian company Crystallex International's permit to develop the long-troubled mine project south of the Orinoco river.

Russian-Canadian miner Rusoro had hoped to partner with Venezuela in what could be Latin America's largest gold deposit. Las Cristinas has estimated reserves of 17-million ounces.

In a meeting with Chinese investors, Chavez said he was firming "an agreement with CITIC for the joint development of Las Cristinas." He gave no more details.

Chavez, who was speaking at his last meeting before flying to Cuba for cancer treatment, has brought Venezuela ever-closer to China in terms of business and political ties during his 13-year rule of the South American OPEC member.

Development of the Las Cristinas mine, near a town bearing the name of the mythical golden city of El Dorado, has dragged for decades due to a mixture of bureaucratic, political and financing issues.

Some locals say the mine is cursed.